Zacks Bull and Bear of the Day Highlights: Kroger, DSW, American Electric Power, Public Service Enterprise Group and ALLETE
CHICAGO, April 25, 2013 /PRNewswire/ -- Zacks Equity Research highlights Kroger (NYSE: KR) as the Bull of the Day and DSW (NYSE: DSW) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on American Electric Power Co. (NYSE: AEP), Public Service Enterprise Group (NYSE: PEG) and ALLETE Inc. (NYSE: ALE).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
With sluggish data and an uncertain global outlook, many investors are delving deeper into U.S. focused stocks. The focus has largely been on more defensive areas, such as consumer staples companies, as these are seen by many as lower volatility choices that can still participate in any market swings higher.
In particular, investors have been seeing a solid outing from companies like Kroger (NYSE: KR), which have not only performed well to start the year, but are well positioned to continue their run in the second half of 2013 as well.
In fact, Kroger has already gained over 30% in the YTD time frame, a pretty incredible figure that has not only crushed the S&P 500, but has also obliterated expectations for the grocery store segment as a whole.
Don't be alarmed by the firm's big rise so far this year though, as there are a few reasons why the trend could continue in the near term. First, double digit earnings growth is projected for the next quarter, while the next five years look to see a 9.2% growth rate, a better level than what was seen in the trailing five year period.
For the last few years, DSW (NYSE: DSW)has been a pretty hot stock. The company has managed to beat out many of its consumer discretionary peers and do quite well in the post-recessionary environment.
In fact, DSW has surged more than 300% in the trailing five year period, thoroughly crushing the S&P 500 in the process. Much of these gains were the result of consumers looking for bargains at their stores, and with the economy slowly improving, there are concerns about some trading up to the next level.
This is largely due to a bullish stock market, a return in housing prices, and better job prospects. All of which makes people feel richer and better about their future, a situation that may not always be great news for discount companies like DSW.
These trends are finally starting to catch up to DSW in 2013, as the company has seen its share price flounder, and investor perception of the company change. The stock is actually down about 4% YTD, and many are expecting this trend to continue in the near term.
This shift in perception is largely due to the poor earnings outlook for DSW in both the current quarter and current year figures. In both of these time frames, there is universal agreement among analysts to move estimates lower, with similar projections hitting the next quarter and next year consensuses as well.
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American Electric Boosts Dividend
American Electric Power Co. (NYSE: AEP) has announced that its Board of Directors has increased its quarterly dividend by 4.3%, bringing the annualized dividend to $1.96 per share from the previous payout of $1.88 per share. The board commented that the company is well-positioned for earnings growth in the range of 4% to 6%.
Following the hike, the company will now pay a quarterly dividend of 49 cents as against the 47 cents paid earlier. The said dividend will be paid on Jun 10, 2013, to shareholders of record as of the close of business on May 10, 2013. The current dividend generates a dividend yield of 3.87%.
American Electric had made its last dividend increase in Oct 2011. It had increased its quarterly dividend by 2.2% from 46 cents per share to 47 cents per share. It has been paying dividends for the last 412 consecutive quarters.
The trend of dividend increase indicates the company's financial strength. As of Dec 31, 2012, the company had cash and cash equivalents of $279 million, up from $221 million as of Dec 31, 2011. In 2012, net cash flow from operating activities was $3,804.0 million, up from $3,788.0 million in 2011.
At the meeting, the company also announced that it will increase its capital investments to approximately $3.6 billion in 2013, up from $3.1 billion in 2012. It intends to invest in the development and operation of transmission assets and modernize its generating fleet to comply with new environmental regulations.
The utility sector is known for its defensive nature and its reputation as a dividend payer adds to its defensive stance. In Feb 2013, Public Service Enterprise Group's (NYSE: PEG) Board of Directors announced a 1.4% increase in the dividend bringing the quarterly payout to 36 cents per share from the prior level of 35.5 cents. On an annual basis, the common stock dividend offering comes to $1.44 per share, up from the prior payment of $1.42 per share.
In Jan 2013, another stock in the space, ALLETE Inc. (NYSE: ALE) announced that its Board of Directors has approved an increase in the quarterly dividend rate by 1.5 cents. The annualized dividend rate of the company will come to $1.90, up 3.3% from the prior rate of $1.84.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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